Barnes & Noble rethinks Nook strategy

201302251257 Barnes & Noble rethinks Nook strategy
In the wake of disappointing holiday sales, Barnes & Noble is rethinking its Nook strategy, the NY Times reports, citing anonymous sources. As physical bookstores have become a beloved, adorable, but untenable endangered species, kind of like the panda bear, since 2009 B&N has smartly attempted to move its core business into the digital segment. Their Nook e-reader is widely though of as a competitive (maybe even superior) platform to the Kindle, but recent sales have been down, proving that making a cool gadget is no panacea, and maintaining your cool gadget is an ultra-competitive field.

The problem was not so much the extent of the losses, but what the losses might signal: that the digital approach that Barnes & Noble has been heavily investing in as its future for the last several years has essentially run its course.

A person familiar with Barnes & Nobles’s strategy acknowledged that this quarter, which includes holiday sales, has caused executives to realize the company must move away from its program to engineer and build its own devices and focus more on licensing its content to other device makers.


Basically even though the Nook was cool, as a gadget maker B&N can’t compete with Apple, Amazon, and Samsung and their wide variety of apps. In the future, sources told the NYT, B&N will rely more on selling its vast reserves of content—whatever that is—instead of designing hardware.

In another report in USA Today, B&N chairman Leonard Riggio is said to be planning a buyout of the core bookselling business, leaving the Nook division behind.

Leonard Riggio, who also serves as its chairman, told the board of directors that he wants to buy the retail business but not the Nook Media unit that operates the Nook digital business and college bookstores. The retail business includes Barnes & Noble Booksellers and Barnesandnoble.com. The purchase price would be negotiated with the board. The deal will be done mostly in cash and the assumption of "certain liabilities of the company," according to a document filed with the Securities and Exchange Commission. Riggio would provide the equity financing and arrange any debt financing required for the deal.


B&N has no plans to stop making the Nook…for now. But if we were betting people, we’d be thinking that someday you’ll be able to stack it up next to your laserdisc player and Newton.

Comments

  1. I don’t have any experience with the Nook hardware, but I’ll say this: I’ve got at least five e-book reader apps on my tablet, and the only one I’ve never used for more than the two minutes it takes to verify that it’s installed is the Nook app. Make of that what you will.

    I’ll also say that it’s rather off-putting to walk into a bookstore where the entire front of the store is pushing hard to make you go home and use the internet instead. That can’t be helping them.

  2. Jerry says:

    I have a Nook and this is the story I was afraid to see printed. The Nook in general is a good device but it can be clunky to use at times and I use the Nook app on my ipad more. It doesn’t help that they charge for apps you can get for free on other android devices. It’s annoying that some content you purchase for the Nook cannot be used on other devices…like the ipad! And that is the sole reason why I still have my Nook. I have graphic novels that I purchased for the Nook that, unlike digital books, cannot be read on any other device, including a PC. I don’t know if its a software issue or the strategy B&N came up with to keep Nook users loyal, but either way its what drove me to a tablet and why my spending is down when it comes to Nook digital downloads.

  3. MWorrell says:

    At the moment I had to decide between a Nook Tablet and a Kindle Fire, B&N had just decided to block the sideloading of apps onto their device. That meant no Kindle app, and no Comixology. What a stupid, paranoid move.

    So I got the Kindle Fire, which came preinstalled with Comixology, and I run the Nook app on it (as well as Bluefire Reader, for non-DRM PDFs and EPUB files). Why on earth would I narrow my choices just to go with B&N?

  4. Chris Hero says:

    I’m sure Torsten could say much more about this, but as a B&N shareholder that follows the reports pretty diligently, this article reads misleadingly to me.

    Riggio wants to buy back the retail portion and take it private. There could be any number of reasons for this. The Nook portion would then likely be spun off into it’s own company. Shareholders, like myself, would get some cash and some shares in the new company. The Nook company would then likely look more into selling e-textbooks, I’d imagine, or would just be bought out and folded into Microsoft. Our friend Tireless Torsten would hopefully continue to be employed by the private retail company.

  5. Cat Eldridge says:

    The stated ‘fact’ in this story about bricks and mortar bookstores being an endangered species hasn’t been true for several yars now as both the number and profitability of local bookstores has dramatically increased. Even this small city (Portland, Maine) has a thriving general bookstore with sales up every year for the last decade, and two comic shops that are doing well.

    So maybe you really should research something like this before stating something as true.

  6. LordByron says:

    I agree with what Kelson said. I do a lot of travel on the weekends and frequently stop at out of state B&Ns for tea and weekend reading, and it’s very off putting to walk in and be bombarded with in-your-face eager Nook salespeople saying hello to you the second you walk through the door.

  7. John Warren says:

    Cat, if you’re going to chide others for not doing research, you should provide some hard data of your own. All the statistics I can find online say that you are wrong. Check out this article:

    http://oedb.org/library/beginning-online-learning/12-stats-on-the-state-of-bookstores-in-america-today

  8. Dave Miller-lad says:

    In the future the only reason people will go into bookstores is to pick up chics

  9. Saipaman says:

    I have a Nook Simple Touch and love it. I can read for hours on it’s E-Ink screen. I’ve bought more (non-comic related) books in the year and a half of having this device than I’ve bought in the previous ten years.

    Of course, not all those books were from Barnes & Noble which I suppose is the root of their problem.

    I do subscribe to the New York Times through it though.

  10. Mesektet says:

    This is the beginning of the end of the world. Right now you don’t actually have to leave your house for anything. It will only be a few years before there are no real shops left. High streets will become baron wastelands.

    As much as i love the internet, it’s pretty much destroying civilization.

  11. Crazy Ol' Hobo says:

    This is sad news I’m a crazy old hobo and Barnes and Noble is where I do most of my pooping.

  12. Snikt Snakt says:

    “The stated ‘fact’ in this story about bricks and mortar bookstores being an endangered species hasn’t been true for several yars now as both the number and profitability of local bookstores has dramatically increased.”

    Cat, thanks for the good laugh this morning, I needed that!!! LoL :-D

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